The US economy has slowed more than expected since the beginning of the year
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The United States economy slowed to 1.1% in the first quarter, more than expected, amid the biggest drop in business investment since the start of the pandemic.
It is reported Financial Times citing a preliminary assessment by the US Department of Commerce.
Thus, the GDP of the States increased by 1.1% in the first quarter of 2023 in annual terms. That marked a sharp slowdown in growth from 2.6% in the Tories’ fourth quarter, and came in well below the 2% growth expected by economists.
The country’s economy, on the other hand, showed a high rate of growth in consumption, which compensated for the costs of businesses to create inventories and slow down investment. Consumer spending rose by 3.7% compared to 1% in the last quarter last year. Private investments, on the other hand, fell by almost 13%.
The slowdown comes as the Federal Reserve pursued aggressive monetary policy throughout the year in an effort to curb domestic demand to slow inflation, which has hit a 40-year high. Since last March, the Fed has raised its key rate from near zero to just under 5%, the fastest increase in decades.
The Fed is likely to raise rates by another quarter of a percentage point next week, bringing it to a new target range of 5% to 5.25%.
As of March, Fed officials expect GDP growth to slow to 0.4% in 2023 before recovering to 1.2% next year. Meanwhile, the unemployment rate will peak at 4.6% in 2024, up from the current level of 3.5%.
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